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KOE Chapter 1 Introduction to Entrepreneurship

KOE Chapter 1 Introduction to Entrepreneurship

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Chapter Outline: Introduction History and development of entrepreneurship. Entrepreneurship as a process. Entrepreneurship as a state of mind or series of attributes. Forms of entrepreneurship. Social entrepreneurship Intrapreneurship Extrapreneurship Opportunity vs. necessity entrepreneurship Evolution of Entrepreneurship in Ghana. Role of entrepreneurship in the development of a country’s economy. Challenges facing Ghanaian entrepreneurs. Factors favouring entrepreneurship. Why become an entrepreneur? Overview of entrepreneurial cycle. Case study: Sedina Attionu Questions for case discussion.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship


Chapter 1 – Introduction to entrepreneurship Chapter Outline: Introduction History and development of entrepreneurship. Entrepreneurship as a process. Entrepreneurship as a state of mind or series of attributes. Forms of entrepreneurship. Social entrepreneurship Intrapreneurship Extrapreneurship Opportunity vs. necessity entrepreneurship Evolution of Entrepreneurship in Ghana. Role of entrepreneurship in the development of a country’s economy. Challenges facing Ghanaian entrepreneurs. Factors favouring entrepreneurship. Why become an entrepreneur? Overview of entrepreneurial cycle. Case study: Sedina Attionu Questions for case discussion.

Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship


For a book primarily targeted at undergraduate university students in Ghana. in this introductory chapter we set the definition and the concept of entrepreneurship in a Ghanaian context by first tracing the evolution of entrepreneurship in Ghana and then considering the challenges faced by Ghanaian entrepreneurship. we explore in detail why someone might become an entrepreneur as opposed to working in what we call Corporate Ghana. Many entrepreneurs who we spoke to admitted that entrepreneurship is a fulfilling. An understanding of the evolution and development of entrepreneurship is a necessary first step in appreciating the concept of entrepreneurship and its contextual usage over time. the main focus of the rest of the book. This cycle begins with the identification of opportunities from ideas through to mobilising resources to implement and nurse these ideas into profitable enterprises. The Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 4 . some of which we shall explore in this chapter. The chapter ends by providing an overview of the entrepreneurial cycle. we consider some long standing definitions of entrepreneurship and the development and usage of the word ‘entrepreneur’. As the primary focus of this book is on Ghanaian entrepreneurship and Ghanaian entrepreneurs. We then consider the role entrepreneurship plays in a country’s development as well as the factors that favour entrepreneurial development. we introduce the concept of entrepreneurship to lay the foundation for the discussions that follow in the later chapters. The word ‘entrepreneurship’ is often used in everyday language to connote certain behavioural and physiological attitudes and attributes. The word entrepreneurship evolved from the 17 th Century French word ‘entreprendre’. Before suggesting our own definition of entrepreneurship. challenging but hugely rewarding career. History and development of entrepreneurship The term entrepreneurship does not lend itself to easy definition. The chapter also discusses the various forms of the concept of entrepreneurship. from which entrepreneurship is derived.Introduction In this chapter.

The word “entreprendre” was also used more loosely to refer to anyone who undertook significant projects such as the building of cathedrals or castles – contractors who bore the risks of profit or loss. Cantillon’s definition is believed to be the first attempt at formalising the term entrepreneur. In 1734. In earlier usage. labour or capital belonging to other people but not in use economically. the other two being the landowners (providers of primary resources) and the hirelings (those who rented the services of the entrepreneurs). The entrepreneur/middleman intervened by converting resources such as land. The two words were combined to create the word ‘entreprendre’ meaning ‘to undertake’ or more literally a ‘between-taker’ or a ‘gobetween’). entrepreneurs were one of the three main agents in every economy. The concept of entrepreneurship was further extended to tax contractors. the word entrepreneur referred to a middleman or a director of resources owned by others (for example landowners and other resource owners). Jean Baptise Say is credited with popularising the word “entrepreneur”.word ‘entreprendre’ is a combination of two French words ‘entre’ which means ‘between’ and ‘prendre’ which means ‘to take’. These resources were transformed into useful activities like the production of goods and services that yielded profit for the benefit of both the entrepreneur and the resource owner. in his seminal work Essai sur la Nature du Commerce en Général (The Nature of Trade in Generali ) maintained the meaning of the word entrepreneur as a middleman by describing the entrepreneur as a person who pays a certain price for a product to resell it at an uncertain price. These were individuals who paid money to a government for the license to collect taxes in their region and for which they were given an agreed percentage. In A Treatise on Political Economyii . The word entrepreneur was thus used to generally describe individuals who “undertook” the risk of new enterprises and bore the risks of profit or loss. he defined an entrepreneur as one who consciously moves economic resources from an area of lower productivity into an area of higher productivity and greater yield. His definition gave the term entrepreneur a distinct identity though the definition has evolved since. According to Cantillon. the French economist Richard Cantillon. thereby making decisions about obtaining and using resources while consequently assuming the risk of enterprise. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 5 .

assuming the accompanying financial. Schumpeter referred to the entrepreneur as an innovative generator of ideas who reformed or ‘revolutionalised’ patterns of production and existing ways of doing things to create goods and services that are valuable to the society. technological progress and the birth of corporations and businesses.During the industrial revolution in the eighteenth century. Hisrich. The period from the nineteenth century to the mid1970s saw waves of financial institutions. partnerships and companiesv of all sizes. We agree with Hisrich’s definition that entrepreneurship involves some element of ‘adding value’. Alternatively it may start with an opportunity which acts as a catalyst for the development of an idea. a modern day authority defines entrepreneurship as ‘the process of creating something different with value by devoting the necessary time and effort. In the mid 20th century. With this emerged leaders of industries who stimulated the development of industrial capitalism and became the new “entrepreneurs”. receiving the resulting rewards of money and personal satisfactioniv’. in such a way as to maximise return for the enterprise. The idea must be tied to an opportunity in the following sense: significant numbers of people should be willing to pay for the product or service that stems from the idea to enable the Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 6 .iii The meaning of entrepreneurship has since evolved greatly in practice and academia. The entrepreneur must add some value to the initial primary inputs to create the goods and services that people are willing to pay for. Joseph Schumpeter referred to an entrepreneur as a necessary destabilising force bringing economic growth through the disequilibrium of constant change and innovation. In both scenarios. the term "entrepreneur" referred to inventors of new techniques who borrowed money from banks to develop their inventions so as to earn profits from those inventions. psychological and social risk. It is the process of risking resources based on an idea (or series of ideas) to develop the idea(s) into goods and/or services that people perceive as valuable and are willing to pay for. . the entrepreneurial process ends with profits (or losses). Entrepreneurship as a process We define entrepreneurship as a process. In this context and throughout the book ‘enterprise’ includes sole proprietors. Entrepreneurship as a process starts with an idea around which an opportunity is developed. although the extent of value addition differs from entrepreneur to entrepreneur and from enterprise to enterprise and may range from the immaterial to the material.

the relevant product or service at the heart of the venture must “remove an existing pain” i. For an entrepreneurial venture to be viable. many would consider shopping at a fee for busy people in Ghana a good idea. In 1974. She realised there was such a demand for her product that she soon left VRA and set up Camelot to provide the customised payslip product to as many employers as possible. This thought will be developed in more detail in Chapter 11 but suffice to say that for now. Today Camelot is a leading security printer in Ghana with sixty (60) employees providing services for governments. due to the possible lack of Ghanaians willing to pay for this service (given the oversupply of cheap domestic labour) the entrepreneurial idea may not be profitable or worth pursuing. As in the case of Mrs. there must be significant numbers of individuals and corporate entities that perceive the relevant product or service as valuable and are willing to pay more for it than it costs to produce. The company is also listed on the Ghana Stock Exchange with a stated capital of GH¢168. However. It is generally accepted that if the opportunity is attractive enough and the idea to exploit the opportunity is realistic. Let us consider an example. should be the key consideration.664. Mrs.e it must meet an unmet need or improve an existing solution in such a manner that enough potential customers exist to create a market for the venture. they will come” (meaning as long as the entrepreneur makes a determination on what product or service to provide. As Johnsonvi explains. he will find a market) to trying to figure out what customers want and/or need before deciding what to ‘build’ to satisfy those needs or wants. creation [that is development of the idea] ‘is opportunity driven rather than resource driven’. For example. rather than the idea in itself. and to what extent it does so. while working as a computer programmer at the Volta River Authority (VRA). Whether the product or service is perceived as valuable will depend on whether or not it fulfils a customer need. Elizabeth Villars. resources will be found. Elizabeth Villars. and multinationals companies in ten (10) West African countries with a subsidiary in Nigeria. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 7 . founder and managing director of Camelot Ghana Ltd came up with the idea of designing customised payslips with the computer (then a novelty) for her employer. successful entrepreneurial practice has moved away from the sentiments captured in Henry Ford’s famous statement that “if you build it. The opportunity that the idea seeks to tap into.entrepreneur generate revenue from the idea.

pursue and exploit opportunities regardless of the resources that they actually control. tolerance of ambiguities. Entrepreneurship as a state of mind or series of attributes The word ‘entrepreneurship’ is also used to describe the characterization of attributes that enable people to exploit opportunities for financial reward. entrepreneurship is a human and a creative act of applying energy to initiative and building an enterprise or organization. In many cases. entrepreneurship can be described as the state of mind that motivates an individual (alone or with others) to start a new activity and to take steps to realize a desire or dreamvii. rather than just watching or analysing. We will discuss in chapter 6 the different forms of business organisation open to an aspiring entrepreneur. human and capital resources. willingness to take risks. a sense of mission as well as commitment. As we will see in Chapters 3. These resources might be ‘risked’ by an individual or corporate entity acting alone or in concert with others. The individual involved in entrepreneurship requires a willingness to take calculated risks – both personal and financial – and do everything possible to reduce the chances of failure. In Timmon’s view. In a similar vein. he must possess certain attributes such as opportunity obsession. For an individual to create and build such vision. entrepreneurship also covers the acquisition of an existing business and in some instances. the entrepreneur will carry on as sole proprietorship without a separate legal entity. it may cover the inheritance of a business. ability to seize opportunities and salesmanship. Timmonsix views entrepreneurship as the ability of an individual to create and build a vision from nothing. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 8 . In this sense. These attributes (which we discuss further in Chapter 2) include passion. the entrepreneur(s) will establish a separate entity through which to risk the resources to provide relevant products and services that the entrepreneur hopes will generate profit. 5 and 6. In other cases. It should not be assumed from the foregoing discussion that entrepreneurship is exclusively limited to starting a new enterprise or to commercial enterprises.The key resources “risked” in creating and sustaining an entrepreneurial venture are time. Entrepreneurship is also viewed as a pattern of behaviourviii that enables individuals to recognise.

create and manage a venture in order to create a social change. Mission-related or social impact (rather than wealth creation) is the purpose of social enterprise. In each case. Social entrepreneurship identifies an idea in the form of a social problem and then seeks the requisite resources to develop solution(s) to the problem. for profit ventures) set up with a social purpose. Also included in social entrepreneurship are business ventures (i. it is important for meeting its objectives that its savings and loans arm makes a profit.e. The factors that result in the establishment of an entrepreneurial venture influence the form that the enterprise will take. Although Sinapi Aba Trust itself is set up as not-for-profit. The spectrum of social entrepreneurship includes not-for-profit organisations that set up profit making initiatives or ventures to support the not-for-profit aims of the organisation.Forms of entrepreneurship Entrepreneurship comes in different forms. Social entrepreneurship Social entrepreneurship is the process of using entrepreneurial principles to organise. Examples of these types of social enterprises include the establishment of the Grameen Bank in Bangladesh in 1976 by Muhammed Yunus and the establishment in Ghana in 1994 of Sinapi Aba Trust which provides micro-financing to small and micro enterprises that are unable to access financial assistance from the formal banking institutions due to lack of collateral amongst other reasons. Another example may be a mission hospital that charges fees for its services as will the Teachers Fund Financial Services which is focusing primarily in the provision of low cost loans to teachers and other workers in the country. Such notfor-profit organisations identify ideas and opportunities they can exploit to generate profit to support the overall not-for-profit objectives. Sinapi Aba Trust aims to fulfil its mission of “providing opportunities for enterprise development and income generation to the economically disadvantaged to transform their livesx. social entrepreneurship is concerned with creating social impact that benefits society generally (a significant subsection thereof) rather than individuals. Sinapi Aba Trust operates financial institutions all over Ghana through which it mobilises savings and makes loans to its target groups. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 9 . Through this. Social entrepreneurship is more likely to be concerned with situations of creating wide-scale social change (for example a cure for HIV) than with financing narrow objects that might only benefit a small number of people (for example South Labadi Residents Community Bank).

the intrapreneur has access to resources which may have been unavailable outside the organisation. risk-averseness. The intrapreneurs will often be motivated by a desire to overcome the shortcomings of the larger organisation. own the entrepreneurial concept which will belong to the company for which the intrapreneur works as an employee. financial and personal rewards may be limited as these go to the company or the wider organisation supporting the intrapreneur(s). We submit though that Intrapreneurship should be seen as a potential “win-win” for the companies that pursue it as it enables them to retain their brightest staff who might otherwise be tempted to start their own entrepreneurial ventures. (such as– bureaucracy. However. which are inconsistent with entrepreneurship. The individual intrapreneurs or teams usually use the resources of the organisation to develop their entrepreneurial ideas. formats or channels. In many instances. lack of innovation. organisational structure Intrapreneurship has become more relevant as technology and increased opportunities have created a more aggressive breed of entrepreneurs posing enormous challenges for traditional corporations. intrapreneurs develop within a large and bureaucratic establishment. for the intrapreneur. It enables companies that pursue it to benefit from a wider myriad of ideas for new products and services than any formal approach to new product development may have produced. Also. The intrapreneur who is the originator of the idea however does not typically. services. When an intrepreneur or team of intrepreneurs develop a new idea or opportunity which forms the basis of intrapreneurship. sometimes outside the scope of the organisation’s core business. slow response rate). As a result. in an increasing number of instances. a smaller ‘spin off’ or separate division may be developed as a regenerate ‘enterprise’ through which resources are risked and through which the relevant services or products are provided. Intrapreneurship occurs when individuals (intrapreneurs) or teams within these organisations develop new products.Intrapreneurship Intrapreneurship refers to the formation of new ideas or innovations within already existing (typically larger) organisations. the intrapreneur is able to negotiate with his employers such that he profits directly from the success of his Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 10 and therefore prefer to spinoff the division and develop a separate division or entity rather than add to the existing .

xi Similarly. It is no wonder that some of the world’s leading companies actively encourage intrapreneurship. 3M a multinational manufacturing company. This initiative has been at the forefront of the company’s innovation and the development of innovative products such as the Post-it notes. a direct format for taking personal insurance directly to the customer positioned largely on convenience was developed by an employee who was figuring out ways to meet his business targets. The success of the intrapreneur is disproportionately dependent on his or her interpersonal skills. Instead. In Ghana. Divisions should also be kept small. It could be argued that Hewlett-Packard [HP] might have been a pioneer in the personal computer business if it had recognized and exploited the opportunity presented it by its (then) employee – Steve Wozinak – with whom it could have partnered to compete in the personal computer space. translucent dental braces and Tipex. Sometimes the Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 11 . Wozinak left Hewlet Packard to start Apple Computers with Steve Jobs. “MET2U”. due to lack of interest and support from his employer. MET2U has become a key part of Metropolitan Insurance Company’s strategy of selling insurance products to individuals For intrapreneurship to work. To succeed.intrapreneurial effort. Extrapreneurship Extrapreneurship arises when individuals or groups in an organisation break off or spin-off from the parent organisation to establish their own enterprise typically with support from the organisation it broke away from in the form of financial and social capital. At Metropolitan Insurance Company Limited. we have also seen some examples of intrapreneurship emerge. he was given the requisite resources and support to develop it. the intrapreneur needs to be able to work with and through people to obtain the requisite support and resources from management. Once he told management about the idea. exploring ideas that interest them most. It must be willing to encourage entrepreneurial behaviour and a culture where failure is tolerated amongst its ranks. Google employees are encouraged to spend 20% of their time on independent projects. provides a platform that encourages the development of small teams and a plethora of employee ideas. top management must be committed to it.

organisation seeks out an entrepreneur and supports him/her with space and other resources to start a business which will trade on the network of the “supporting company”. Since its establishment. Incubation in the entrepreneurial context is a similar notion – it involves “nurturing” start-up business with an enabling environment. An example is Busy Internets Incubation Program which started in early 2005 with support from the infoDev Program. In Ghana there’s a notable absence of incubators. Incubations may be set up by universities or high tech parks amongst others. The extrapreneur may break-off as a result of the factors listed earlier as hindering intrapreneurship or because he has identified a peculiar opportunity which will not fit the overall strategy of the organisation. Chesbrough. but this time as entrepreneurs and not employees. Business incubators play an important role in creating and supporting entrepreneurs. the incubators set entry criteria for the entrepreneurs they admit. to provide sufficient resources for the companies to grow and also to accelerate growth and expansion with new markets. Extrapreneurship also includes management buyouts. As Hansen. access to a network of portfolio companies and coaching and advice. incubation (in the context of rearing chickens) refers to the process of warming the eggs either by the mother hen sitting on them or by a mechanical process until they are hatched. Nohria and Sull notexii these services are intended to maximise the chances of success of the young companies. The new organisation may be in the same line of business as the one it broke off from or may become a customer of or a supplier of a product or service for the organisation it broke from. material and intangible resources to grow their business to the stage where they can stand on their own. This occur in situations where managers are confident about their ability to turn a business around and so acquire it from its owners and run the business that previously employed them. Typically. the investee company is provided with subsidized offices. Incubation In ordinary English usage. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 12 . it has worked with young enterprises by providing them with the opportunities to survive. Typically.

Opportunity entrepreneurship occurs when an individual develops an idea to exploit an existing opportunity. middle age crises. made their own mats and wove cloth such as Kente and other fabrics. either because it is the best option available to them or because there are no other options available to them. Necessity entrepreneurs are thus pushed into entrepreneurship. the poor and displaced in society) who venture into entrepreneurship out of necessity. Given that a changed condition requires such an individual to respond as an entrepreneur. According to the GEM. the process may not be as straightforward as has been suggested in the preceding paragraphs. alcohol and leather. as they advanced on the path of civilization. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 13 . they then work their way backwards to find some idea or opportunity that will give them enough to live on. leading to the creation of gold weights and then to nickel coins towards the close of the nineteenth century. Necessity entrepreneurship. opportunity entrepreneurship is characterised by growing a business to take advantage of a unique or perceived market opportunity. . necessity entrepreneurship The discussion so far has been that the starting point of an entrepreneurial venture is either an idea based on an opportunity or an opportunity which acts as a catalyst for an idea. ornaments. Necessity entrepreneurship may also arise as a response to changing conditions (migration. Gold dust and cowries were used as the initial forms of currency. Necessity entrepreneurs are people (typically. They manufactured bows. implements and weapons. divorce or loss of job) in an individual’s environment. Evolution of entrepreneurship in Ghana Entrepreneurship in Ghana was fairly developed before the first arrival of Europeans. Early entrepreneurial activity in Ghana was characterized by barter in items such as trinkets. but not always.Opportunity entrepreneurship vs. The Global Entrepreneurship Monitor (GEM)xiii differentiates between two types of entrepreneurship: Opportunity entrepreneurship and necessity entrepreneurship. Although our ancestors initially produced these materials for their own immediate needs. Our ancestors identified opportunities for trade with other tribes and risked resources to produce or procure the relevant items for trade. weapons (including guns and gunpowder). they exchanged products with their neighbours and later. In some cases however. carried over the trade to larger areasxiv. They worked precious minerals into jewels. however results from lack of options.

wines and spirits. they concentrated on fighting the exploitative colonial system. both local and European entrepreneurs participated in 'legitimate trade'. An example of such an entrepreneur according to Gockingxviii was Nii Kwabena Bonne II. a chief who made a call to boycott European and Lebanese merchandise like cotton. For example. The first Europeans to set foot in Ghana – the Portuguese.We can also classify the early European explorers who arrived in the Gold Coast as entrepreneurs. predominant among them. In the face of peril and uncertainty. Reynoldsxv reports that many of the pre-colonial entrepreneurs were slave traders who used their experience from dealing with foreigners during the slave trade to profit from legitimate trade. flour and spirits in 1947. in 1471. The boycott was meant to express their displeasure of Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 14 . there emerged yet another group of indigenous entrepreneurs. As a result. engaged in trade with the people of Edina (now Elmina). They sought funding from the newly established Bank of British West Africa in the form of advances and overdrafts to finance their trade although it appears that Bank of British West Africa and its successors paid more attention to foreign businesses operating in Ghana rather than local entrepreneursxvii. canned meat. When the slave trade was abolished. the Gold Coast became a raw material producer for industrialized European countries feeding the factories of European entrepreneurs as well as providing a market in which European firms could sell their finished goods. the Ashanti cocoa farmerxvi. instead of the Ghanaian entrepreneurs of the time channelling their energies and resources into productive ventures. After being colonised. they risked significant resources for the purpose of achieving profit by identifying trading opportunities with the indigenous people of the Gold Coast. This spawned a further set of Ghanaian entrepreneurs – large-scale farmers and exporters of cash crops. This undermined entrepreneurial development as this mode of operation was tedious and did not encourage large scale mining. As receipts from export of gold and cash crops led to a demand for imported textiles. The Dutch and English governments after forcing the Portuguese out of Ghana issued Charters to trading companies to strengthen their operations (including the deplorable slave trade) along the West African coast. Some of the indigenous entrepreneurs formed limited liability companies to import these products. Consequently. textiles. The policies of the colonial government largely focused on protecting British overseas interests. Ghanaians whose lands contained diamonds were prevented from mining unless they were prepared to use ‘native’ or crude methods. beads. Ghanaian entrepreneurship was discouraged.

which overthrew Nkrumah’s including generous customs duties and tax relief packages for these infant but foreign government. The National Liberation Council’s (NLC) government.e. several small scale enterprises went bankrupt due to the credit squeeze and the devaluation of the Ghanaian currency. The immediate period after independence witnessed the introduction of a mixed economic system. It is important to note that Busia’s government was the first (at least post-independence) to extensively draw policies and establish bodies to aid in developing the Ghanaian entrepreneur. the government granting them incentives encouraged the development of foreign entrepreneurs by owned enterprises. The government had an entrepreneurial development plan that sought to Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 15 . a consequence from adhering to conditions attached to International Monetary Fund (IMF) loans the government had taken out to restore the country’s economy. Thus. This was to be achieved within a framework of marketoriented economy backed by a nationalistic agenda through a policy of ‘Ghanaianisation’ (i.the persisting developments that were focused on protecting British overseas interests to the detriment of the Ghanaian entrepreneur. On one hand. He was apparently worried that they might develop into a powerful capitalist group that could threaten his socialist regime. creating a preference for Ghanaian enterprises). Nkrumah announced that his government would place greater emphasis on Ghanaian cooperatives rather than encourage Ghanaians to start private sector business enterprisesxix. instead of encouraging domestic enterprises for the expansion of the economy. the system encouraged private and foreign participation in the economy and on the other it ensured government participation in enterprises through companies owned either solely by the state [State Owned Enterprises] or in joint partnership with the private sector. Under the NLC however. The policy sought to put stability above growth and return the economy to one characterised by privateenterprises and decentralised system. showed concern for local entrepreneurs when in 1968 a policy document titled ‘The Promotion of the Ghanaian Business Enterprise’ was published. Hakamxx argues that Nkrumah did this because he did not want to create indigenous capitalists who would be difficult to control politically. Nkrumah’s government initially supported private enterprise but in 1960.

the second stage of which sought to encourage small scale industries and liberalise the economy. the Rawlings’ government had to embark upon the depiction and implementation of the Economic Recovery Program (ERP). Safo Adu (Industrial Chemical Limited) were prosecuted and lost their businesses in unclear circumstancesxxii. Properties worth millions of cedis including a number of private manufacturing companies were confiscated on grounds of alleged financial and economic malpractices. The Rawlings government initially appeared to be opposed to entrepreneurship. Under the Structural Adjustment Programme (SAP). Provisions were also made for Ghanaians to purchase the businesses owned by foreigners. In the same period. in an ironic twist of events. After two years of sustained economic stability. private Ghanaian/foreign ownership and purely Ghanaian ownership. The open and uncontrolled importation of finished goods however put many local industries out of business. The policy of ‘Operation Feed Yourselves and Industry’ which Acheampong implemented benefited Ghanaian entrepreneurs because importation of certain products were banned leading to Ghanaian production of such goods. due to conditions attached to aid sought from the West. However. a successor policy to the ERP.foster growth of private industry and enacted the Alien’s Compliance Order to get rid of foreigners in the country who were believed to have taken up most of the small and medium scale enterprises which should have been in the hands of Ghanaiansxxi. Acheampong’s government (a military one that overthrew the Busia –led government) specified areas reserved for state ownership. the government established the Ghana Enterprises Development Commission and Small Business Credit Scheme to help Ghanaian manufacturing enterprises obtain credit for their operations. there was discontentment among Ghanaian entrepreneurs because a few of their own colleagues were gaining undue advantage of others because of their social and political connections.A Mensah (International Tobacco Company Limited). Siaw (TATA Breweries Limited) and Dr. J. the Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 16 . a decline set in and by the mid 1970s. A National Public Tribunal was set up where several high profile entrepreneurs such as B. joint state/foreign ownership. This resulted in the mushrooming of many small businesses. K.

ICT and telecommunications. Typically though. The Coca Cola Bottling Company of Ghana Limited and Golden Tulip Hotelxxiii to the private sector. Ghana Agro-Food Company.000 entrepreneurs by the National Board for Small Scale Industries by 2007. Establishing the Ghana Venture Capital Trust Fund in 2004 to provide long-term capital for small and medium scale enterprises. Full tax exemption from corporate income tax. Arranging 500 tailor-made business improvement programmes for 15. dividend tax and capital gains tax was granted to eligible venture capital companies and investment in eligible venture capital companies was made fully tax deductible. Introducing an unlisted securities market on the Ghana Stock Exchange to enable SMEs secure equity financing. Though not operational at the moment. constituted a small number with deep pockets or who were able to partner foreign investors. To encourage Foreign Direct Investment (FDI) into Ghana. Between 1994 and June 2002. The following policy initiatives of the Kufuor Government were also aimed at encouraging entrepreneurship: Promoting. given the size and the scale of the investment required. it is expected that its full implementation will enable entrepreneurs to access equity funding from the stock exchange without necessarily being listed.309 FDI compared to [ ] in 1983. the Ghanaian entrepreneurs who were able to participate and benefit from the government's divestiture programme. GIPC registered 1.government embarked on a divestiture implementation policy where it sold its interests in a large number of state enterprises such as West Africa Mills. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 17 . the Ghana Investment Promotion Centre (GIPC) was established by parliament in 1994. The Kufuor Government which came into power in 2001 sought to make the private sector the engine of growth in the economy and embarked on a number of policies with the aim of driving and encouraging entrepreneurship in Ghana. Removal of import duties and Value Added Tax on industrial raw materials. irrigation pumps. developing and sustaining growth of micro and small enterprises (MSE) and training graduates to establish their own micro and small enterprises. fishing ropes and nets. It also sought to take the liberalization of the economy (started by Rawlings) one step further by deregulating the petroleum sector and seeking public-private partnerships to participate in a number of sectors such as energy.

Ghana has not always been a nation that has cherished and encouraged entrepreneurship. More recent governments have however made concerted attempts to encourage and develop entrepreneurship as they recognise the important role entrepreneurship plays in the development of a nationxxiv.Review of petroleum exploration law to make Ghana an attractive destination for investments in hydro carbon exploration. Role of entrepreneurship in the development of a country's economy Create jobs As any economy becomes more developed. although entrepeneurship has been with us from pre-colonial times. Reconstitution and strengthening of the National Board for Small Scale Industry (NBSSI) to provide technical and financial support for small and medium scale enterprises. the EXIM Guarantee Bank and the National Investment Bank. The government also seek to develop an incubation policy to help design. A significant majority of these jobs are created by entrepreneurs. The major policy initiatives by the Mills Government that supports the growth of entrepreneurship in Ghana are: Facilitating the use of various incentive schemes to ease credit delivery to entrepreneurs including using EDIF. The establishment of Export Trade Houses to address the challenges that small and medium scales enterprises face in the export sector. entrepreneurs take a greater role than the Government in providing jobs and career development opportunities for individuals. By providing jobs. The Mills Government came to power in 2009 with a ‘Better Ghana Agenda’ that aim among others to enhance the country’s economic growth by supporting the development of micro. develop. small and medium enterprises in the country. entrepreneurs help create wealth for individuals as well as the government. support and monitor private sector business incubators in the country. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 18 . What is clear from the foregoing discussion is that. The government has instituted various policies targeted at entrepreneurial development in the country though it has also taken steps at revamping the country’s State Owned Enterprises particularly those in the utility sectors. Over 80%xxv of jobs in Ghana are in the informal sector.

The increased availability of housing has also been driven largely by the efforts of members of the Ghana Real Estate Development Association who risked capital resources to acquire and develop private homes for sale in several parts of the country. all things being equal. energy.8% in December 2002 to 14% in 2005xxvii was largely driven by entrepreneurial activities by the likes of Mobitel now TiGO. the State is able to free up some of its resources for infrastructural development. Customers are given greater choice for services and goods and can make informed choices about which products and services best meet their peculiar needs. This in turn forces entrepreneurs to compete with each other for the patronage of the customer. For example the increase in the telephone density ratio in Ghana (that is the number of people as a percent of the population who own telephones) from 1. Fosters Competition An active entrepreneurial sector is one in which healthy competition exists as several firms and individuals produce similar goods and services.Drives economic growth Entrepreneurs also contribute directly to increasing the gross domestic product (that is the total volume of goods and services produced in a country) through the goods and services they provide.4% of total telephone subscribers are able to communicate with telephones. These entrepreneurs and SME owners also contribute to economic growth in Ghana through the inflows of foreign currency they receive (by way of payment for exported goods). information technology. Frees up State Resources As entrepreneurs invest in the management of enterprises and sectors of the economy that the State may have otherwise been required to invest in to provide certain goods and services. reduces the general prices Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 19 . Statisticsxxvi indicate that about 94% of Ghana's industrial sector is made up of small and medium scale enterprises. In Ghana. education. financial services. It also. real estate amongst many other sectors. They also contribute to the local economy through their aggregate demand for goods and services that they need as inputs for their own business. by training the labour force they employ and by paying taxes on the profits they make. Spacefon (now MTN) and Kasapa through whom 73. telecommunication. the increased participation of entrepreneurs in the economy has led to increased investment in roads.

Although there are no figures available for Ghana.of goods and services. Also. Koala and Melcom all competing for the same market has brought about these competitive pricing of goods sold in these shops. Increases productivity Entrepreneurs contribute to increased productivity in the economy. anecdotal evidence suggests that innovation in most industries in Ghana has been driven by entrepreneurs and SME owners. new processes and new sources of supply. entrepreneurs would be willing to invest in new ways of delivering goods and services and indeed of producing those goods and services so as to reduce costs. As they compete for consumers and seek new ways of meeting demand. To do so. Max Mart. For example. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 20 . These factors motivate entrepreneurs to become far more productive than public sector employees. cut out waste and reduce the time needed to deliver goods and services. they rely on new technology. The increasing number of departmental stores such as the Game. processing juice and vegetables for export was pioneered by entrepreneurs such as Mrs Esther Ocloo. Fosters innovation A corollary of the earlier point about competition is that entrepreneurship fosters a culture of innovation as entrepreneurs compete amongst each other for the same limited pool of consumers. It also has a direct correlation with financial gain and reward. For example. To help increase their market share or margins. The increasing use of software for business solutions was driven by entrepreneurs such as Herman Chinery-Hesse of SOFT Tribe. the use of DSL Internet connectivity in Ghana was pioneered by entrepreneurial outfits such as Zipnet. unlike the public sector. An economy that fosters entrepreneurship is therefore also one in which individuals are likely to want to experiment to come up with new ways of doing things so as to profit from their innovation. competition in the telecoms sector in Ghana among the likes of MTN and Kasapa has led to a reduction in the costs of owning and maintaining a mobile phone from an average price of [ ] in [ ] to [ ] in 2010. entrepreneurs (and those working for them) can typically see direct ties between their hard work and their output. they effectively reduce inefficiencies in the system.

Further. o Little initiative by banks to be creative: Historically. . Although many entrepreneurs have ideas to convert into “bankable” businesses. Challenges facing Ghanaian Entrepreneurs The entrepreneurs we surveyed they face. The reasons for this are many and include: Low incomes and corresponding low savings culture: As a result of low income prevailing in Ghana and the corresponding low savings culture. Ghanaian banks have taken advantage of heavy government borrowing and the high interest rates to make money by lending most of their deposits to the government. access to credit was considered the number one barrier to operations and growth. Gross domestic savings as a percentage of GDP averaged 6. we understand that very few succeed in obtaining the requisite funding to do so. Entrepreneurs make a vital contribution to the public purse through a number of direct and indirect taxes they pay. As a result of this. entrepreneurs increase government revenue through Value Added Tax and National Health Insurance Levy on the goods and services that they provide. Ghanaian entrepreneurs have had to fund long-term financing needs with relatively expensive short-term financing. Access to finance: consistently across different sectors and business types. Inability to properly evaluate and price entrepreneurial credit. In addition. management and technology transfer agreements. banks in Ghana have had a rather limited deposit base from which to provide long-term capital for entrepreneurial development. capital gains tax and withholding tax on dividends. Banks generally find it difficult to be able to properly analyse and price entrepreneurial ventures presented to them. The effect is that they tend to treat Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 21 highlighted the following as some of the main challenges o . entrepreneurs provide income that forms a major part of government revenue..4% in Ghanaxxxx compared to [.Tax base to government By contributing to the tax base.]. This has reduced the pool of funding that may have otherwise been available to fund entrepreneurial ventures. they may pay other taxes such as.. They are taxed on profits of their enterprise and the incomes of their employees.

As we shall see in chapter 9.entrepreneurial ventures as an amorphous set with the banks demanding the same set of collateral and other requirements instead of evaluating and pricing each entrepreneurial venture separately. motivating and developing them. and acting like pro-private sector or pro-entrepreneurship. The most common complaint being what has been termed the “Ghanaian mentality”. Many are also ill-equipped to provide the level of support entrepreneurs may require. Human capital: After finance. At the Ghana Investments Promotion Centre (GIPC). These public/civil servants seem more concerned with unnecessary bureaucracy and systems that add questionable value. The inability or rather unwillingness of the typical Ghanaian employee to proactively participate in developing the enterprise in which he finds himself. At the Companies Registry for example. the relative stability of the cedi and the peaceful democracy that has characterised the Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 22 . As a result many entrepreneurs find themselves doing a lot more than they feel they ought to be doing or would be doing if they had a motivated staff who were committed to developing the enterprise. Political and economic instability: This has been a major challenge for Ghanaian entrepreneurs over the last three decades. The high inflation. Unfriendly government machinery: The institutions and departments of government (such as the Internal Revenue Service (IRS). With the fall in interest rates. part of this problem can be avoided by entrepreneurs identifying the right people and properly rewarding. many entrepreneurs identify “human capital” as their biggest challenge. civil and public servants who populate these institutions appear (whether inadvertently or not) to discourage and hinder entrepreneurship rather than assist entrepreneurs to achieve their objectives. Trademarks Registry. instability of the cedi against major currencies as well as the threat of coup d’états made it difficult for entrepreneurs to properly plan for their ventures. Many entrepreneurs we spoke to would often complain that rather than these governmental institutions seeing themselves as. Companies’ Registry. we encountered officers who were unable to articulate existing investment incentives to potential foreign investors. Land Commission) which entrepreneurs rely on in establishing and operating their enterprises are perceived by entrepreneurs as being “entrepreneur unfriendly”. we came across officers who lack basic understanding of the very law (the Companies Code) which governs how companies must be set up and registered.

entrepreneurs often have to conduct or commission their own research. entrepreneurs have had to borrow at rates as high as 47% in 2000. In Ghana. high lending rates and rapid depreciation of the cedi which has made entrepreneurship very unattractive. Political stability also involves having stable political governments that encourage entrepreneurship through policy initiatives. Indeed. While we take the view in chapter 4 that research should be undertaken by entrepreneurs. Factors favouring entrepreneurship Entrepreneurship thrives in economies that have the following characteristics: Political stability: This involves protection from political or excessive governmental influence in entrepreneurial activities. In seeking reliable market data. Where data considered being for public consumption is available. there is a marked absence of widely available and reliable data on the economy. Available data is also not updated periodically which make it difficult for entrepreneurs to make considered risk and resource allocation decisions that affect their businesses. Even a reliable recent figure for unemployment in Ghana (other than the 2000 figure) appears to be non-existent. this challenge appears to be improving. Ghana has been characterized by high rates of inflation. Although more recently (August 2010xxviii) the lending rates by banks have reduced to an Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 23 . market size and segments. especially at the stage where the entrepreneur is considering a particular idea and has yet to establish the validity of his idea. Access to information: From the initial decision to invest in an enterprise to the decision to harvest.Ghanaian economy over the last seven years. it may not make sense (at least at that stage) to invest in customer research but to rely on publicly available data(and preferably free). For most of its independent history. In some situations too. sometimes the scale necessary to obtain accurate research results might be such that it may not be possible for a single entrepreneur to undertake the research. Most entrepreneurs therefore like to operate in an environment of macroeconomic stability (and predictability). Macroeconomic stability: The risks that entrepreneurs take are largely calculated risks. the entrepreneur would require reliable market data based on which he can make decisions. there is often a lack of willingness to release this data to the general public.

securing rights to lands and buildings strengthens incentives to invest and facilitates trade. . a simple property transfer in Accra city costs 3. [compared to an average of 61. The rule of law and mechanisms for contract enforcement: Contract enforcement is Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 24 . information on the institutions that offer capital as well as assist in the development of entrepreneurs must be easily accessible to prospective as well as established entrepreneurs to aid in their establishing.] Free flow of information: The free flow of information is important for entrepreneurship to thrive in any economy. In Ghana. 11. and cost and capital required of 162. it takes on average 33 days and it involves 8 different procedures and also costs 26. Property registries are so poorly organized that they provide little security of ownership.8 days. planning and developing entrepreneurial ventures.4% of Ghana’s Gross National Income (GNI). families. the laws governing the sector one wants to venture into. land and buildings account for between half and three quarters of country wealth in most economies. entrepreneurs can obtain mortgages on their homes or land to start businesses. Research carried out by the Financial Times reported in 2005 that foreign investors to Ghana are deterred by high business costs and problems such as land tenurexxxi.5%.7% 14% of the value of the property and takes over 382 days to register the property compared to no cost in Saudi Arabia and 1 day in Norway.This is still much higher than pertains in other countries.4% of Ghana’s Gross National Income (GNI) and requires capital of 13. private individuals and public or Government institutionsxxx with its attendant problem of the same land being sold to several people at a time.9% of GNI respectively in the rest of Sub-Saharan Africa. and with formal property titles.8% and 209.average of 25. In Ghana. acquisition of land for business has been described as a major obstacle to business development and growth because of the complex land tenure system where ownership is held by a combination of traditional authorities. Consequently. In Ghana. Information on the market size for product.1 procedures. Secure property rights: According to the World Bankxxix. according to World Banks 2010 data on starting a business. and the minimum capital required by regulation. Ease of starting businesses: For entrepreneurship to take root it must be easy to start a business in terms of the number and cost of processes required to register a company.

There are many highly talented Ghanaians who just want to be given a chance. it takes an average 487 days to enforce a simple payment dispute compared to [581. preventing unfair Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 25 .1 days in the Sub-Saharan regionxxxii. Equally important. There are increasing numbers of banks that have proved willing and able to assist small businesses. There are some organisations that specialise in providing venture capital for entrepreneurs with brilliant ideas. has found that in many cases the issue about calibre is significantly exaggerated because of the unwillingness of business managers/owners to invest time in training. Regulation of businesses: The quality of government regulations of businesses and the institutions that enforce this regulation are a major determinant of prosperityxxxiv. there must exist a sizable consumer base to patronise the products and services provided. Kuenyehiaxxxiii however. the more likely it is that he might be willing to enter into a broader range of agreements with a wider number of people to facilitate his entrepreneurial activities. Regulations such as those protecting trade secrets and patents. Access to finance: This is a very important aspect of the entrepreneurial process. The more confidence an entrepreneur has in the legal system. Availability of human capital: Entrepreneurs do not operate in a vacuum and as a result need to be able to tap into a talented labour pool to be able to exploit the available opportunities. Size of the market in terms of numbers and income levels: Since entrepreneurship involves turning ideas into goods and services that take away an existing pain and at the same time result in financial reward.critical for entrepreneurs who enter into relationships with customers and also for the financiers of these entrepreneurs. Many entrepreneurs complain about the calibre of the available labour pool. Amalbank and Ecobank as being particularly supportive of their entrepreneurial effort. . the income levels of the target should be such that they can afford to pay for the value added to the product or service. a number of entrepreneurs we spoke to singled out Zenith Bank. Although by no means exhaustive and certainly not an endorsement . The ideas or opportunities as well as the acquisition of the other resources to turn the idea(s) into an entrepreneurial venture is only possible with adequate financial resources. according to the World Bank. In Ghana.

through its Monetary Policy Committee initiated policies that brought interest rates down from 47% when the Bank of Ghana Act 2002 was passed to 15% in August 2010. entrepreneurship thrives.competition. The idea is to encourage “settlement” rather than protracted delays in litigation which has historically been the case. The Bank has passed a number of directives and policies which encourage and support entrepreneurs. the commercial court requires parties to a dispute to participate in a pre-trial conference at which a judge tries to settle the matter without the parties having to continue in court. the Bank of Ghana Act 2002(Act 612) established the independence of the central bank (Bank of Ghana)xxxvi. as is the case in the United States. people are scared of taking any risks that may diminish the loss of that statusxxxv. to expose corruption and other criminal wrong doing and to disseminate ideas. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 26 . Culture: Where the culture of a country encourages risk taking and boldness and celebrates honest failures. The Bank of Ghana. Also. Under the late Chief Justice Acquah. our culture is one where there is a lot of stigma and shame attached to business failures. In Ghana. the colonial educational system focused on development of clerical and literacy skills deemed necessary for colonial administration and for making good employees out of locals rather than entrepreneurs. supporting thriving businesses all determine the extent to which entrepreneurship develops in a country. In Ghana. Monetary stability consequently encourages the inflow of capital assets and prevents a flight of capital from the country. attributes this to the fact that because the Ghanaian society is status driven. a commercial court was set up to focus exclusively on hearing commercial matters. the Scottish serial entrepreneur and founder of Busyinternet and an entrepreneur in Ghana for over ten years. The following institutions provide the proper framework to enable entrepreneurship to thrive: An independent central bank to help ensure monetary and economic stability. As part of its procedural requirements. This legacy continues. An independent judiciary to ensure that the rule of law is enforced including ensuring impartial enforcement of contract terms and the protection of property. Mark Davies. Independent media and easy access to credible information to facilitate the free flow of information.

Why become an Entrepreneur? Typically. there is also a risk that at least in the initial stages the income might be pretty modest or even non-existent. a significant majority of graduating students from universities and polytechnics in Ghana would take 'regular' executive or civil service career paths. Increasingly. many graduates are therefore attracted by the prospects of working for an already established company (banks in particular) or governmental sector where there is certainty of income and (in the initial stages at least) Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 27 . people simply ‘dip their toes’ in the entrepreneurship water by starting an entrepreneurial venture on the side while they maintain their day time jobs in Corporate Ghana. the reverse is true – some start out in business of their own but later move to join an established company or the civil service. they will have a constant stream of income from Corporate Ghana while pursuing their more risky entrepreneurial passion. By doing so. It is possible that after investment of time. Some also. Certainty of income: An entrepreneur's income is typically (at least in the initial stages) uncertain. at least until their entrepreneurship venture is at a stage that they feel confident about making the plunge full time. many will also spend their time moving from one corporate establishment to the other. the business might fail. There is therefore less security in starting your own business than in joining an already established company or the civil service. While there is a great potential to make significant financial gains by going it alone. In some rare instances. energy and resources. Rather than face a short term or medium term future of modest or non-existent income. The appeal of joining 'Corporate Ghana' or the Civil Service straight from university is as follows: More security: Starting a business of your own requires greater initial risk.Neutral and professional army or security forces to help ensure law and order as well as protect life and property. In many instances. Many would go on to spend the rest of their working lives climbing the ladder in big and small corporations as well as the civil service and eventually retire on a pension paid by these corporations or the civil service. after working for a number of years and gaining experience and contacts gather the courage to 'go it alone' in a business venture by starting or even buying a small or medium size business.

especially those straight out of university and with relatively little capital. As a result. By contrast taking the corporate or civil service route ensures predictable hours and less personal stress making these routes more attractive. learning in that environment and making mistakes at the expense of the employer rather than your own. Responsibility: Starting and managing an enterprise entails such a significant level of responsibility that may deter many graduates. graduates joining a company or a governmental sector would expect to move on to other job functions. Even where graduates definitely intend to pursue entrepreneurship as an option. This makes pursuing the regular corporate or civil service path much more attractive to many. Starting and managing your own business entails working many long and unpredictable hours and making many personal sacrifices that many young graduates may not initially be willing to make. Lower levels of stress. they may decide to go and 'learn' in such environments before taking the plunge. responsibilities or even different companies or governmental departments during the course of their working lives. Smaller personal risk: Arguably. It entails being responsible for the outcome of all decisions relating to the business and making many decisions that they might not be knowledgeable about. There would be several layers of people in the organisation to bounce ideas off and it Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 28 . the only real risk in taking a corporate or civil service job is the opportunity costs of taking that job which many people cannot initially quantify. By contrast though. By contrast. they often consider which jobs would give them the best opportunity to train to develop their skills set. it is better to learn on someone else's dime (or cedi) before making that plunge meaning that it is better to spend time learning in the corporate environment. starting and managing a business involves many personal and financial risks that may deter several people. greater opportunities for training and personal development which makes such jobs more attractive than entrepreneurial roles.relatively more income. Greater training opportunities: Often. Our view is that as much as possible. A job in a well established company such as a multinational or a big local corporation or in the Civil Service would typically offer bright graduates. working hours and better quality of life: Starting and managing your own business as a full time job can be extremely stressful. joining a corporation or civil service department would ensure that all responsibility given is well measured out and phased.

However. unlike his counterparts in 'regular' employment who have no or little flexibility. Rather than simply stay at home for an indefinite period after graduation. is free to decide when to work and what hours to work. That said though. entrepreneurs find that they have little time for anything else other than work. as “master of his enterprise'. Family: Many people opt against the traditional route of corporate or civil service 29 Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship .would be the exception rather than the rule that a fresh graduate would be making major decisions on issues on which he or she is not knowledgeable. a few still decide to venture out on their own and take the entrepreneurship option because of the following reasons: Autonomy & Desire to control own destiny: One reason that people cite for starting their own business is the desire to control their own destiny. some become entrepreneurs less by choice than by necessity. Opportunity to reap unlimited profits: Employees would typically take a limited share in the profits of the companies they work for as the bulk of the profits will go to shareholders. regardless of company politics or the goodwill of employers and superiors. This makes entrepreneurship particularly attractive although it must be borne in mind that the flip side is true as well: Whereas employees would typically not suffer any loss in the event that their company goes out of business. they call the shots and make the fundamental decisions that concern them. As a result of the above factors. Unemployment & Underemployment: With high unemployment and underemployment in Ghana. they begin to pursue entrepreneurial ventures. especially in the initial stages of starting the business. many graduates decide to join established companies or the civil service on graduating from universities and polytechnics in Ghana. Flexibility: Entrepreneurship typically offers great flexibility as the entrepreneur. As the 'boss'. in many instances. They do not have to pander to the whims and caprices of superiors at work to advance. the entrepreneur would most likely suffer significant personal and financial loss if this were to be the case. Entrepreneurs who own and manage their own business however can reap unlimited profits from their venture. Entrepreneurship is such that they can go as far as they want.

However. there is a need for start-up capital. Those who provide these financial resources must be appraised by the entrepreneur before taking Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 30 . which may come from the owner's savings. rather than have entrepreneurship 'imposed' on him by the family. even in such instances. These resources may take a number of forms but typically. In most businesses though. business associates or members of a distribution channel. it is more attractive to take a step in this direction as the requisite capital and other support would readily be available. it can be said broadly that entrepreneurship follows 4 main stages: o o o o Identification of opportunities Acquiring resources Implementing plan to take advantage of opportunity Harvesting the opportunity Identification of opportunities Identification of opportunities is the point at which individuals realize there are opportunities to be tapped in the market place. Opportunities for entrepreneurial ventures may also come from a wide variety of sources including complaints from consumers. The impetus for this may come from a number of sources. In chapters 3. finance and human capital. 4 and 5 we discuss in more detail the identification of opportunities in the form of idea and opportunity analysis and considering whether to buy an existing business or start one from scratch Acquiring resources Once you have identified an opportunity and developed an idea that you would like to exploit the opportunity. you need to find resources required to be able to exploit those opportunities. top on the list are time. loans and other parties looking to invest by way of acquiring equity. An individual (for example one who wants to leave his current employer) may actively research these opportunities.employment because of a family tradition that is steeped in entrepreneurship. Where parents or grandparents are already well established entrepreneurs. it is important for the would-be entrepreneur to independently want to become an entrepreneur. many businesses take off without requiring any resources other than the time and human capital that the owner provides. Of course. Overview of the Entrepreneurial Cycle -The 4 Stages of entrepreneurship Despite the diversity of enterprises that constitute entrepreneurial ventures.

such resources as an assessment of the needs and requirements of the providers of financial resource would put the entrepreneur in a better position to bargain for the resources at the lowest cost without losing control. is that the discipline of planning and thinking through the issues that might. The odds of success in small business are pretty bleak so it is important that entrepreneurs develop as robust a plan as possible to take into account any number of contingencies. arise is invaluable in itself to any entrepreneur or potential entrepreneur. Implementing Plan to take advantage of opportunity This phase involves developing a plan and implementing that plan to ensure that entrepreneurs are able to achieve the maximum potential gains from their investment. Similarly. In chapter 9 we discuss the process of attracting and retaining the requisite human resources. no matter how small an enterprise. and it is consequently highly recommended that everyone does at least some basic planning in relation to their enterprise. this is succinctly summed up by the old adage that 'Success is when preparation meets opportunity'. it must be pointed out that several plans made for business are not actually relied on or quickly become outdated giving the fast pace of the nature of the relevant business. In chapter 13 we discuss how an entrepreneur may harvest the fruits of his entrepreneurship. QUESTIONS FOR CLASS DISCUSSION Should every entrepreneurial venture seek to remove a customer pain or satisfy a customer need in order to survive and make profit? Do you agree with the assertion that the development of an entrepreneurial idea ‘is opportunity driven rather than resource driven’? Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 31 . an entrepreneur who has worked hard to successfully develop his enterprise may decide to 'harvest' that opportunity by making the decision about whether to sell a part or all of that enterprise privately or seek an initial public offering (IPO) on the Ghana Stock Exchange. In chapter 7 and 8. however. However. Indeed. Harvesting the opportunity A farmer looks forward to the harvest season when the fruits of his hard labour in tilling the soil in the scorching Ghanaian heat are rewarded with cash paid for his produce. Our opinion. we will discuss the process of writing and implementing a business plan in more detail. we discuss the process of acquiring and managing financial resources. or might not. In chapter 14.

how easy or difficult is it to become an entrepreneur in Ghana.Are there particular traits. attitude or characteristics that one requires to be a successful entrepreneur? Is there a truly social entrepreneurship? Can intrapreneurship affect the growth of entrepreneurship in Ghana? Has successive Ghanaian governments stifled the growth of entrepreneurship in the country? What do you think government should do to foster entrepreneurial development considering the role they play in national development? Does the Ghanaian political. attributes. Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 32 . social and economic environment promote entrepreneurship considering the factors that has been identified as necessary to fostering entrepreneurship? From your personal experience and interactions with people.

she’s still paying off. After obtaining her degree in Pharmacy at the University of Science and Technology. a lack of job opportunities after relocating to Accra made her open her first pharmacy shop in 1999. she had to deal with regulatory issues of the pharmacy council in order to keep her shops open. a Ghanaian pharmaceutical manufacturing company where she was in charge of marketing for Francophone West Africa. In addition to the challenge of finance. Chief Executive Officer and Managing Director of The Pillbox. She encountered a fair share of challenges. As she had no equity of her own. has not always been an entrepreneur. Her vision is for The Pillbox to become a household name. synonymous with world-class dispensary service. She subsequently worked in various capacities at Phyto-Riker. Kumasi. All these problems have not deterred her. Most suppliers and industry ‘gurus’ thought she was ‘too-known’ for trying to make such a big impact in their industry in so little a time and threw as many stumbling blocks as they could in her way. Her bankers were a bit jittery about plans for such “rapid” development. she had no alternative other than to rely on debt financing and to date. the major one being availability of finance for her projects. testing and certification company where she helped set up Medlab. Working in a male-dominated industry did not make matters any easier. she had opened five additional shops. she travelled to England to work with Victorian Support. Her strategy was to set up a chain of retail pharmacies to ensure economies of scale where her products would be relatively cheaper. a chain of pharmacy shops in Accra. The regulatory experience she got at the Council put her in a good position to work with SGS (Societe General de Surveillance S. verification. known for reliable supply and the ability to provide whatever drug a customer wants when no one else can. It was quite difficult acquiring capital from the banks for the expansion phase.A) the Swiss inspection. a US pharmaceutical company and at Intravenous Infusions Koforidua. Although she is not working with a spelled out business plan. a medical laboratory based in Accra. They thought she was new in the business and should take her time and not move as fast a pace as she wanted to. Although she did not intend using her license to work as a pharmacist. a UK charity and later for the West Middlesex University Hospital. She sees them as tests which have strengthened her as an entrepreneur. In the space of five years.CASE STUDY: SEDINA ATTIONU: NECESSITY ENTREPRENEUR? Sedina Attionu. Upon her return to Ghana she did her compulsory national service at the Pharmacy Council of Ghana. her Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 33 .

She is however quick to caution that. She is embarking on a social franchising model of opening at least a shop in every district in Ghana. thinks about it a bit and exclaims. translating into cheaper products that are affordable to all Ghanaians.target is to own about half. Asked if there was anything she wishes to have done differently. Currently. of the industrial share of retail pharmacies in Ghana. marketing and customer service be included in all books on entrepreneurship in Ghana as it would help immensely. Her advice to all those who want to give entrepreneurship a shot is “just go for it!” She believes that one can do anything she sets her mind to. She also recommends that chapters on management. that makes 140 shops by 2011!! Sedina realizes that she needs to keep employees who believe in her vision and are ready to work hard to bring her plans to fruition. Also. Sedina agrees that it has not been an easy task running her business. “It’s part of the challenges that comes with being a woman entrepreneur. a mother and wife” is all Sedina says about this “inconvenience”. was put on bed rest and could not go out and check on the progress in the various outlets. she has six shops. She believes that the wider spread The Pillbox is. she is trying to set up as many outlets as possible. the high interest on loans and the fact that there is so much debt to be repaid” but the satisfied smile on her face when she talks about her shops seems to say. The 30 employees she has now were employed after a rigorous selection process and all subsequent employees will be subjected to the same procedure because the only way she can translate world class service to her clients is through her staff. “I don’t regret anything one bit”. QUESTIONS FOR CASE DISCUSSION: 1. finance. “I wouldn’t have expanded as quickly because of the stress. She hopes to open thirty more outlets in the next five years. Especially when she was carrying her babies. the better its economies of scale will be. she pauses. “you must save some money and have equity of your own before starting out because debt financing is a very strenuous and stressful situation to have to deal with in the early stages of running a business”. Can Sedina be described as an opportunity entrepreneur or a necessity entrepreneur? Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 34 . and that’s where she’s channelled her energies. If the social franchising gets the funding it needs. if not more.

Philadelphia: Lippincott. Letts Educational.The Google story. New York:Baram Dell. xiiiBosma. LexingtonBooks.page 7.2005. Industrial and Commerical Training.D.2. Timmons.. 1986. Small Business Management. 2nd Edition. Does the gender of a person affect his or her entrepreneurial skills? 5.php?option=com_frontpage&Itemid=1 September 2010 xi xii Vise and Malheed. Are Sedina’s plans for expansion realistic and achievable i ii iii Higgs. 1994) x http://www. 1855 Stokes. Sull (2000). 1931. MA. LL. Henry. Volume 33 Number 4 2001 pp 135-140 vii viii ix Paul-Arthur Fortin (1992)….. D. Entrepreneurship. Nohria. an active learning approach. Harvard Business Review 78 Sep-Oct. 96 iv v See Chapter 6 vi Johnson. What is the opportunity/necessity that Sedina is seeking to exploit? What is the idea? stability? 3.com/sat/index. Chesbrough. and Harding.] Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 35 . Grambo & Co. IL: Irwin. New Venture Creation. What are the risks faced by Sedina operating without a business plan? 6. pp. Global Entrepreneurship Monitor. 4th Edition (Homewood. Life and Work of Richard Cantillon. R. London. 2009 Expenditure Report..sinapiaba. N. London: Macmillan.Textbook ibid J. Translated by Clement C. 74-84. 1997 Robert D Hisrich.. (2009 and 2006 summary results(2007)[CHECK.. H. Intrapreneurship and Venture Capital. Biddle.. Lexington. Will you say Sedina is driven by passion for her business or by need for financial 4. Networked Incubators: Hothouses for the New Economy.

2000 Gocking R. E. November 1. 2006[CHECK] World Bank Group Private Sector Network.. S.dic. Doing Business in 2005 Sub-Saharan Africa[UPDATE] xxxii xxxiii Management Express Forum. 2008] xxxvi Banking Act 2002 (Act……. 2004 http://www. London. Trade and Economic Change on The Gold Coast 1807-1874. London. London and Basingstoke. 1996. 2010 xiv xv xvi xvii xviii xix xx xxi FK Buah: A history of Ghana. Banking in Ghana. Westport: USA. Uncommon Practice: Strategy that works (unpublished). Ghana University Press.gemconsortium. 2005. Macmillan. Trade and Economic Change on The Gold Coast 1807-1874. 1989 Asamoa. Ghana. Longman. The State of the Ghanaian economy in 2005 (Institute of Statistical Social and Economic Research) Bank of Ghana. Longman. the Ghanaian experience.M[Check]. Ansa Socio Economic Development Strategies of Independent African Countries. M.gh/ [check date occurred] See pages[ ] on the Role of entrepreneurship to the development of a country’s economy et al found in The State of the Ghanaian economy in 2009(Institute of Statistical Social and Economic xxv Gough Research) xxvi xxvii xxviii xxix xxx xxxi State of the Ghanaian Economy 2003. World Bank Group Ibid Kuenyehia. ISSER. 1980 Reynolds. Lecture delivered at British Council World Bank Group Private Sector Network. Politics in Ghana 1982 – 1992. Woeli Publishing. Accra. Assessed 8th August. Tony. xxii xxiii xxiv Mike Ocquaye. Development Economics in Action. The history of Ghana. The economy of Ghana. London. Lecture delivered at Ghana Institute of Management and Professional Administration [XXX. Doing Business in 2005[UPDATE] Sub-Saharan Africa Enterprise Forum. 1974 T E Anin. Heinemann.) www.com. Macmillan Press. 2005 Kellick. Accra and Kumasi June 2007 xxxiv xxxv Mark Davies.) Kuenyehia On Entrepreneurship Chapter 1: Introduction to Entrepreneurship 36 . 1978 Hug. 1974 Reynolds. Greenwood Publishing Group Inc. July-Dec 2004 Financial Times Special Report Ghana.org.

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